Tag Archives: loss of income

One of the federal government’s most-important financial relief efforts for underwater homeowners started operating Nov. 1.

Traditionally short sales, where the lender agrees to accept less than the full amount owed and the house is sold to a new purchaser at a discounted price, are associated with extended periods of delinquency by the original owner. The new Fannie-Freddie program breaks with tradition by allowing short sales for owners who are current on their payments but are encountering a hardship that could force them into default.

Eligible hardships under the new program run the gamut: Job loss or reduction in income; divorce or separation; death of a borrower or another wage earner who helps pay the mortgage; serious illness or disability; employment transfer of 50 miles or greater; natural or man-made disaster; a sudden increase in housing expenses beyond the borrower’s control; a business failure; and “other,” meaning a serious financial issue that isn’t one of the above.

Homeowners who participate in this new program should be aware that although officials at the Federal Housing Finance Agency – the agency that oversees the program – are working on possible solutions with the credit industry at the moment, it appears that borrowers who use the new program may be hit with significant penalties on their FICO credit scores – 150 points or more.

Other factors to consider are promissory notes and other “contributions.” In the majority of states where lenders can pursue deficiencies, Fannie and Freddie expect borrowers who have assets to either make upfront cash contributions covering some of the loan balance owed or sign a promissory note. This would be in exchange for an official waiver of the debt for credit reporting purposes, potentially producing a more favorable credit score for the sellers.

Finally, participants should be aware of second-lien hurdles. The program sets a $6,000 limit on what second lien holders – banks that have extended equity lines of credit or second mortgages on underwater properties – can collect out of the new short sales. Some banks, however, don’t consider this a sufficient amount and may threaten to thwart sales if they cannot somehow extract more.

Read the full storyhttp://www.latimes.com/business/realestate/la-fi-harney-20121111,0,6735335.story

Search this site

Search for:

Assisted Living Research Institute has created a dedicated section on their site that provides comprehensive information.
Click to find out more on topics like: available care options, financial support, and free resources that are available.

About John A Silva

As your local real estate adviser in the area of San Diego County with over 28 years of experience, my goal is to provide you with relevant local housing market information, tips, and advice.

Get a free market evaluation on your home and look for homes on the MLS in San Diego County now FREE!!

Subscribe via Email

Follow Me On The Web!

Heal from Foreclosure

For a Compelling Guide to weaving through ALL the experiences of a hardship with applications for coping personally and with family: having to sell Your Home is unbelievably lightened! Anyone that would never consider selling their home, this is a MUST read.